Associated British Foods (ABF) has announced the closure of its Vivergo bioethanol plant after the Government failed to come up with a rescue package.
UK bioethanol has been under pressure from competitive US production. The UK-US trade deal removed the 19% tariff on ethanol imports and replaced it with a duty free TRQ of 1.4 billion litres.
The last wheat delivery occurred last week and operations will start to wind down this week. The plant used to take more than 1m tonnes of wheat annually and concerns will now hang over the second large bioethanol plant on Teesside.
NFU combinable crops board chair Jamie Burrows was dismayed by the news and said: “The closure of the Vivergo plant is a huge blow. Not only is it terrible news for those hundreds of workers who will lose their jobs but also for the thousands of people whose livelihoods depend on this supply chain – which includes local farmers who have lost a vital market for their product.
“Bioethanol production in the UK is such an important industry. The volume of wheat entering the supply chain has been as high as 1.2m tonnes. It also plays a key role in producing a vital source of animal feed as a by-product and CO2 used by the wider food supply chain.
“We need the Government to recognise the potential economic growth and value of this market by ensuring crops grown for biofuels are used increasingly in road transport and aviation. This will open up further market opportunities to incentivise growers to support the country’s biofuel plants.”
A statement issued by ABF read: The decision to close the plant follows extensive discussions with the Government to find a regulatory and financial solution that would enable Vivergo to operate on a profitable and sustainable basis.
These discussions were necessary because Vivergo’s commercial viability was undermined by the way in which UK regulations were being applied to favour foreign producers, an issue subsequently made much worse by the Government’s decision in May to remove the tariffs on US bioethanol coming into the UK market. These two actions meant Vivergo would inevitably continue to be heavily loss-making without corrective Government intervention to provide short-term financial support and a longer-term regulatory solution.
